Loans

Information On Startup Business Loans

Written By: admin
-
Feb•
12•13

Startup Business Loan Options For Entrepreneurs

One of the most exciting times for a young business is when you have a clear idea of what you want to produce or sell and are ready to go out and start making money. Startup bsiness loans can be an integral part of your business becoming a success.

Unfortunately, as many entrepreneurs have found out, if you are not able to commit adequate funding or time to your plan, it can take years for you to bring your product or service to market in acceptable fashion. By that time, competitors or technology advances can rob you of some of your momentum.

So lining up adequate funding to begin or to allow you to start selling is key to the success of any small business. Fortunately, there are several startup business loans available to businesses at this stage of development for you to take advantage of:

Government Funding- A lot of small businesses look in this direction initially and then tend to shy away from the paperwork or qualification requirements that government business help asks for. If you have patience and are willing to put some time into the application process, however, you can do quite well as government resources are there for everyone. Here are a few government loan options:

General 7(a) loans: Designed with small or start-up businesses in mind, 7(a) loans provide funding in the areas that you are most likely to need it. You can get funding to purchase real estate, equipment, another business, or just apply your loan to your working capital

Express and Pilot Programs: Business that are starting up in distressed communities can take advantage of programs like the Community Express Program, which allows your business to purchase equipment, real estate, and inventory. You can also apply your loan to working capital.

Export Loan Program: If you are an exporter or plan to export your products or services overseas, you can apply to receive loans or lines of credit that allow you to visit trade shows abroad or pay for the letters of credit that are sometimes necessary to do business. Similarly, if you need to grow in the foreign market that you are already in, you can apply to receive money to do so.

Rural Business Loan Program: If you live in or are planning to invest in operations in a rural community that is economically challenged, you can apply to receive up to $350,000 in loans to help you grow in these communities. You should know in advance, however, that the government employees that oversee the loan approvals do so by balancing the needs of the community with your application. In other words, as an example, applicants that have asked to purchase and set up wholesale operations have sometimes been turned down and told that if they were to instead ask for money to establish a retail operation where people could come to the community and sample their goods, they would be approved.

Private Funding- Private startup business loans sources include:

Bank Business Line of Credit: Easily the most popular way to get funding for startup companies, the line of credit, unless it is specified otherwise, allows you to use the funds to meet payroll, make purchases, and incur any business-related expense. The flip side of this type of financing is that with the economic recovery only starting rather recently, banks are very specific and very narrow in their definition of who can qualify. Still, if you have ample personal equity, there should be no problem qualifying.

Receivables Line of Credit: During the Great Recession, many real estate mortgage brokers quit and started working with private funding companies to sell lines of credit that are tied to your accounts receivable. Although they cost a little more in terms of short-term interest, they have also proven to be a popular way of gaining short-term financing for start-up businesses. The primary concern when getting approved here is the quality of your receivables.